POLITICS

VAT war: Political or economic?

The raging war on the administration of Value Added Tax in Nigeria goes beyond the economic question of how much accrues to states. In my opinion, it exposes the country’s underbelly as a phantom political entity.
While it points to the cravings of our politicians, especially state governments, for fiscal federalism, the arguments and counter arguments reflect the legendary inability of Nigerian leaders to agree on the best ways to move the country forward.
First of all, it is observed that the problem is not just between federal government and the state government, but Northern states and the East. Why?
It was reported weeks ago that the Hisbah police have been disposing and destroying thousands of alcohol due to the shariah law they abide by. To put aside the fact that taking beer is all about choice, remember the Nigerian system allow shariah law and the same system according to its constitutional law, section 10 which states Nigeria does not support the state religion. How contradicting! But recall that it will definitely have an effect on the VAT because the major aspect that bring more VAT to the government is Alcohol. the ban on Alcohol obviously reduced the VAT that the northerners submit to the FIRS and this same northerners come at the end of the day to collect their own share on this Tax.
There are two ways in which the tax can be shared amongst the three bodies. They are vertical share and horizontal share.
The Vertical share is used in Nigeria on this basis;
Local government 35%
State government 50%
Federal government 15%
Now, if the state government share the 50%, each state will obviously have equal share which seem unfair to those who submit more VAT compared to the north. This was the case that got the cross river governor, Chisom Wike in the limelight.
He decided that the state government had better be collecting this VAT instead of the FIRS. The case therefore was forwarded to high court by the FIRS but got dismissed.
Well, it should be known that the VAT should be collected by the state government and not the federal government but due to some administrative problem, i.e each state government might impose it’s own tax increment and that will make goods more expensive and things hard for citizens.
Since we already know where the problem is, The North. There is a solution without having the state government take the case to court which will make the state government win this case.
The north has been known with their Agriculture but no VAT is imposed on agriculture, just like the VAT is not imposed on the educational products too.
The only thing that cannot be banned by the HISBAH is Agriculture and since the north produce the highest agricultural product, they impose tax on agricultural aspect to make things equal or rule out the Sharia law and Hisbah in order to introduce drinking of beer in the north which obviously is impossible.
Only agriculture can save the north if they want to keep up to the vertical sharing and not the horizontal sharing. the horizontal sharing is when the tax shared will be based on the total VAT submitted by each state which means each state won’t be collecting the same Tax when it is being shared.
In one way, it would have been the best if the FIRS continue to collect the tax but the cross river won the case which make cross river the first state to be collecting it’s own tax.
One obviously can tell that the only time there seems to be any form of agreement is when there is money to share. Such prodigality has been the order of things right from the return to civil rule in 1999. There have been infrequent and indelible occasions of national consensus on the welfare of the people. At every point since then, the federal and state governments would come together and agree on when to share monies from excess crude accounts, argue and concede to disburse revenues without saving for the rainy day. The reason Nigeria has become a perpetual borrowing nation is because it seems to be un-understable for the reason people would need to borrow money when tax isn’t just made a necessity but compulsory for every citizens to pay!
The poor, the middlemen, the rich/wealthy pay taxes daily, monthly, yearly to the government through phone calls, the transactions made at the supermarket, ATM stands, via salaries and more and this insurgency, these bad roads, these poor education, these homeless orphans, these health sectors decay, this 9 years unpaid pensioners that dropping dead due to hunger, the Nigerian debt, are what the people see and hear daily. All of these just before VAT bacame topical.
How do we call this place a country, the misfortune of one is the misfortune of others. It is the high time the government worked it out in togetherness. Nigeria goes to war over everything because leaders fail to understand the essence of their offices. This failure is also why we still do not have a country.